Research projects at universities and hospitals on everything from advanced health technologies to digital media have ground to a halt after the Ontario government pulled the plug on $66-million in funding and loan programs – and there could be more to come.

The government withdrew the research funding to free up money for other programs that it says have a better track record of creating jobs. A senior government official hinted that other grant programs could also be on the chopping block as every ministry faces pressure to find savings.

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Ontario

“It really came down to priorities,” Brad Duguid, Minister of Economic Development and Innovation, said in an interview on Monday. “It’s a question of putting hard-earned tax dollars into areas that are going to get surer and better returns.”

The province’s fiscal challenges are forcing the government to reallocate scarce resources to those areas where it can get a bigger bang for its buck. A government-commissioned review of the province’s public services is proposing an overhaul of the way it spends money to help erase its multibillion-dollar deficit.

The funding cuts caught universities and hospitals off guard when they learned of them in a series of letters and phone calls.

“I think everyone was a little bit in shock,” said Bonnie Patterson, president of the Council of Ontario Universities.

The cuts stand in stark contrast to the government’s pledge to use grants to attract and retain the “best research talent from around the world” and to ensure that the province’s universities and hospitals remain at the forefront of scientific breakthroughs. Premier Dalton McGuinty himself served as the province’s first minister of research and innovation in 2005.

Past recipients of multimillion-dollar grants include a Waterloo-based project teaming up five universities to “radically” improve software developers’ productivity and quality using model-driven engineering, and a Brock University team helping Ontario’s $1-billion-a-year wine and grape industry adapt to climate change by developing hardier vines and early warning systems.

George Dixon, vice-president of university research at the University of Waterloo, said the decision “sets the wrong tone.” It creates the appearance the government is retreating from direct support for universities in helping drive Ontario’s agenda, he said, noting the research was targeted at key economic activities, and applications had to include a commercialization plan.

“This was not funding for what I would call esoteric research in any way. This was very practical and applied funding,” he said in an interview.

Barry McLellan, chairman of the Council of Academic Hospitals of Ontario and chief executive officer of Sunnybrook Health Sciences Centre, warned that Ontario risks losing its best and brightest research talent without sustainable research funding.

Mr. Duguid informed universities and hospitals in late November that the money could be put to better use by offsetting the cost of economic development funds for Southwestern and Eastern Ontario. For every dollar the province invested in the Eastern Ontario fund, which has created 11,700 jobs, the private sector injected $8, he said.

An official in his office said the government has found $66-million in savings so far by cutting grants, including rounds six and seven of the Ontario Research Excellence Fund, and $19-million in business support loans. The government doled out $434-million in the first five rounds of the program, and universities matched the funds they received with $1.1-billion in private and institutional money.

Universities across the province had already submitted letters of intent for the sixth round of funding, and researchers were working to secure partnerships and draft applications for January deadlines. Those projects are now in danger of being scuttled.

But Ms. Patterson said the greatest long-term harm may be that done to universities’ reputations with local industry.

“To me, it’s the credibility of partnerships with universities [that suffers]” she said.

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